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HOW TO PREPARE A BUSINESS PLAN THAT GUARANTEES BIG PROFITS...
Success in business comes as a result of planning. You have to have a detailed, written plan that shows you what
the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.
A business plan is a written definition of, and an operational plan for achieving your goal. You need a complete
business tool in order to define your basic product, income objectives and specific operating procedures. YOU
HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing and hold onto the confidence of your
creditors, particularly in times of cash flow shortages - in this instance, the amount of money you have on hand
compared with the expenses that must be met...
Aside from an overall directional policy for the production, sales efforts and profit goals of your product - your
basic "travel guide" to business success - the most important purpose your business plan will serve, will be the
basis or foundation of any financial proposals you submit. Many entrepreneurs are under the mistaken impression
that a business plan is the same as a financial proposal, or that a financial proposal constitutes a business plan.
This is just a misunderstanding of the uses of these two separate and different business success aids.
The business plan is a long range "map" to guide your business to the goal you've set for it. This plan details the
what, why, where, how and when, of your business - the success planning of your company.
Your financial proposal is a request for money based upon your business plan - your business history and
Understand the differences. They are closely related, but they are not interchangeable.
Writing and putting together a "winning" business plan takes study, research and time, so don't try to do it all in
just one or two days.
The easiest way is to start with a loose leaf notebook, plenty of paper, pencils, pencil sharpener, and several
erasers. Once you get your mind "in gear" and begin thinking about your business plan, "10,000 thoughts and ideas
per minute" will begin racing through your mind... So, it's a good idea when you aren't actually working on your
business plan, to carry a pocket notebook and jot down those business ideas as they come to you - ideas for
sales promotion, recruiting distributors, and any other thoughts on how to operate and/or build your business.
Later, when you're actually working on your business plan, you can take out this "idea notebook" - evaluate your
ideas, rework them, refine them, and integrate them into the overall "big picture" of your business plan.
The best business plans for even the smallest businesses run 25 to 30 pages or more, so you'll need to "title" each
page and arrange the different aspects of your business plan into "chapters." The format should pretty much run
Statement of Purpose
Table of Contents
Current Financial Records
Explanation of Plans For Growth
Explanation of Financing for Growth Documentation
Summary of Business & Outlook for The Future
Listing of Business & Personal References
This is a logical organization of the information every business plan should cover. I'll explain each of these chapter
titles in greater detail, but first, let me elaborate upon the reasons for proper organization of your business plan.
Having a set of "questions to answer" about your business forces you to take an objective and critical look at
your ideas. Putting it all down on paper allows you to change, erase and refine everything to function in the
manner of a smoothly oiled machine. You'll be able to spot weaknesses and strengthen them before they develop
into major problems. Overall, you'll be developing an operating manual for your business - a valuable tool which will
keep your business on track, and guide you in the profitable management of your business.
Because it's your idea, and your business, it's very important that YOU do the planning. Seek out the advice of
other people; talk with, listen to, and observe, other people running similar businesses; enlist the advice of your
accountant and attorney - but at the bottom line, don't ever forget that it has to be YOUR BUSINESS PLAN!
Remember too, that statistics show the greatest causes of business failure to be poor management and lack of
planning - without a plan by which to operate, no one can manage; and without a direction in which to aim its
efforts, no business can attain any real success.
On the very first page, which is the title page, put down the name of your business - ABC ACTION - with your
business address underneath. Now, skip a couple of lines, and write in all capital letters: PRINCIPAL OWNER -
followed by your name if you're the principal owner.
1234 SW 5th Ave. Anywhere, USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on that page, except the page number...
Following your title page is the page for your statement of purpose. This should be a simple statement of your
primary business function, such as: We are a service business engaged in the business of selling business success
manuals and other information by mail.
This should be direct, clear and short - never more than two (2) sentences in length.
Then you should write out a subheading, such as: EXPLANATION OF PURPOSE.
Here you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to
be "sadly" lacking basic information that will enable them to achieve success. This market is estimated at more
than 100 million persons, with at least half of these people actively "searching" for sources that provide the kind
of information they want, and need.
With our business, advertising and publishing experience, it is our goal to capture at least half of this market of
information seekers, with our publication, MONEY MAKING MAGIC! Our market research indicates we can achieve
this goal, and realize a profit of $1,000,000 per year within the next 5 years...
Point to remember: Keep it short. Very few business purpose explanations are justifiably more than a half page
In describing your business, it's best to begin where your statement of purpose leaves off. Describe your
product, the production process, who has responsibility for what, and most importantly, what makes your product
or service unique - what gives it an edge in your market. You can briefly summarize your business beginnings,
present position and potential for future success, as well.
Next, describe the buyers you're trying to reach - why they need and want or will buy your product - and the
results of any tests or surveys you may have conducted. Once you've defined your market, go on to explain how
you intend to reach that market - how you'll alert these prospects to your product or service and induce them to
buy. You might want to break this chapter down into sections such as... publicity and promotions, advertising
plans, direct sales force, and dealer/distributor programs. Each section would then be an outline of your plans and
Moving into the chapter on competition, identify who your competitors are their weaknesses and strong points -
explain how you intend to capitalize on those weaknesses and match or better the strong points. Talk to as many
of your "indirect" competitors as possible - those operating in different cities and states.
One of the easiest ways of gathering a lot of useful information about your competitors is by developing a series
of survey questions and sending these questionnaires out to each of them. Later on, you might want to compile
the answers to these questionnaires into some form of directory or report on this type of business.
It's also advisable to contact the trade associations and publications serving your proposed type of, business.
The chapter on management should be an elaboration on the people operating the business. Those people that
actually run the business - their job titles, duties, responsibilities and backfilled resumes. It's important that you
"paint" a strong picture of your top management people because the people coming to work for you or investing in
your business, will be "investing in these people" as much as your product ideas. Individual tenacity, mature
judgement under fire, and innovative problem-solving have "won over" more people than all the AAA Credit Ratings
and astronomical sales figures put together.
People becoming involved with any new venture want to know that the person in charge - the guy running the
business knows what he's doing, will not lose his cool when problems arise, and has what it takes to make money
for all of them. After showing the "muscle" of this person, go on to outline the other key positions within your
business; who the persons are you've selected to handle those jobs and the sources as well as availability of any
other help you might need.
If you've been in business on any kind of scale, the next chapter is a picture of your financial status - a review
of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss
statements for the past six months, plus copies of your business income tax: records for each of the previous
three years the business has been an entity. The chapter on the explanation of your plans for the future growth
of your business is just that - an explanation of how you plan to keep your business growing - a detailed guide
of what you're going to do, and how you're going to increase your profits. These plans should show your goals for
the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plans
will be accepted as more realistic and, be more understandable as a part of your ultimate success.
Following this explanation, you'll need to itemize the projected cost and income figures of your three year plan.
It'll take a lot of research, and undoubtedly a good deal of erasing, but it's very important that you list these
figures based upon thorough investigation. You may have to adjust some of your plans downward, but once
you've got these two chapters on paper, your whole business plan will fall into line and begin to make sense. You'll
have a precise "map" of where you're headed, how much it's going to cost, when you can expect to start making
money, and how much.
Now that you know where you're going, how much it's going to cost and how long it's going to be before you
begin to recoup your investment, you're ready to talk about how and where you're going to get the money to
finance your journey. Unless you're independently wealthy, you'll want to use this chapter to list the possibilities
and alternatives. Make a list of friends you can approach, and perhaps induce to put up some money as silent
partners. Make a list of those people you might be able to sell as stockholders in your company - in many cases
you can sell up to $300,000 worth of stock on a "private issue" basis without filing papers with the Securities and
Exchange Commission. Check with a corporate or tax attorney in your area for more details. Make a list of
relatives and friends that might help you with an outright loan to furnish money for the development of your
Then search out and make a list of venture capital organizations. Visit the Small Business Administration office in
your area - pick up the loan application papers they have - read them, study them, and even fill them out on a
preliminary basis - and finally, check the costs, determine which business publications would be best to advertise
in, if you were to advertise for a partner or investor, and write an ad you'd want to use if you did decide to
advertise for monetary help.
With a listing of all the options available to your needs, all that's left is the arranging of these options in the order
you would want to use them when the time comes to ask for money. When you're researching these money
sources, you'll save time by noting the "contact" to deal with when you want money, and whenever possible, by
developing a working relationship with these people.
In your documentation section, you should have a credit report on yourself. Use the yellow pages or check at
the credit department in your bank for the nearest credit reporting office. When, you get your credit report, look
it over and take whatever steps are necessary to eliminate any negative comments. Once these have been taken
care of, ask for a revised copy of your report and include a copy of that in your business plan.
If you own any patents or copyrights, include copies of these. Any licenses to use someone else's patent or
copyright should also be included. If you own the distribution, wholesale or exclusive sales rights to a product,
include copies of this documentation. You should also include copies of any leases, special agreements or other
legal papers that might be pertinent to your business.
In conclusion, write out a brief, overall summary of your business - when the business was started, the
purpose of the business, what makes your business different, how you're going to gain a profitable share of the
market, and your expected success during the coming 5-years...
The last page of your business plan is a "courtesy page" listing the names, addresses and phone numbers of
personal and business references - persons who have known you closely for the past five years or longer -
and companies or firms you've had business or credit dealings with during the past five years.
And, that's it - your complete business plan. Before you send it out for formal typing, read it over once a day for
a week or ten days. Take care of any changes or corrections, and then have it reviewed by an attorney and
then, an accountant. It would also be a good idea to have it reviewed by a business consultant serving the
business community to which your business will be related. After these reviews, and any last-minute changes you
want to make, it'll be ready for formal typing.
Hire a professional typist to type the entire plan on ordinary white bond paper. Make sure you proofread it against
the original. Check for and correct any typographical errors then one more time - read it through for clarity and
the perfection you want of it.
Now you're ready to have it printed and published for whatever use you have planned for it - distribution amongst
your partners or stockholders, as the business plan for putting together a winning financial proposal, or as a
business operating manual.
Take it to a quality printer in your area, and have three copies printed. Don't settle for photocopying... Have it
printed! Photocopying leaves a slight film on the paper, and will detract from the overall professionalism of your
business plan, when presented to someone you're trying to impress. So, after going to all this work to put it
together properly, go all the way and have it duplicated properly.
Next, stop by a stationery store and pick up an ordinary, inexpensive bind-in theme cover for each copy of your
business plan. Have the holes punched in the pages of your business report to fit these binders and then slip each
copy into a binder of its own.
Now you can relax, take a break and feel good about yourself... You have a complete and detailed business plan
with which to operate a successful business of your own... A plan you can use as a basis for any financing
proposal you may want to submit... And a precise road-map for the attainment of real success...
Congratulations, and my best wishes for the complete fulfillment of all your dreams of success!!!
(taken from: www.businessplans.org)
The mission statement should be a clear and succinct representation of the enterprise's purpose for existence. It should incorporate socially
meaningful and measurable criteria addressing concepts such as the moral/ethical position of the enterprise, public image, the target market,
products/services, the geographic domain and expectations of growth and profitability.
The intent of the Mission Statement should be the first consideration for any employee who is evaluating a strategic decision. The statement
can range from a very simple to a very complex set of ideas.
How Specific Should You Be?
Normally, the Mission Statement should represent the broadest perspective of the enterprise's mission.
You may want to take the approach of being very specific. For instance, a Mission Statement for a fictitious airline could be worded as follows:
Airco, Inc. will be the 'guaranteed' on-time airline. Maintaining the most efficient equipment in the industry, we will target a customer base of
mainly young businessmen and offer them the lowest cost service on the west coast, with an objective of a 20% profit before tax and a 30% per
year revenue growth.
Or, you may want to say the same thing, but with more room for management interpretation. A more general way of stating Airco's Mission
Statement could be:
Airco, Inc. will be recognized as the most progressive enterprise in the transportation business. We will offer our customers cost effective
transportation service within geographical areas and market segments that can benefit from our services and will insure a return on investment
and growth rate consistent with current management guidelines.
Mission Statements of Well Known Enterprises
The following are some examples of mission statements from real enterprises.
"To solve unsolved problems innovatively"
Mary Kay Cosmetics
"To give unlimited opportunity to women."
"To preserve and improve human life."
"To give ordinary folk the chance to buy the same thing as rich people."
"To make people happy."
These are the 'one-liners', but each is supported by a set of values that set the performance standards and direct the implementation of the
For example, Merck, a company that produces pharmaceutical products and provides insurance for pharmacy benefits, publicly states the
Corporate social responsibility
Unequivocal excellence in all aspects of the company
Honesty & integrity
Profit, but profit from work that benefits humanity
And Walt Disney, an entertainment business states their values as follows.
Nurturing and promulgation of "wholesome American values"
Creativity, dreams and imagination
Fanatical attention to consistency and detail
Preservation and control of the Disney "magic"
Should Your Grasp Exceed Your Reach?
Many believe that the Mission Statement should have a grand scale, be socially meaningful and be measurable. The following are some
examples of historical Mission Statements that were truly grand in scale.
Ford Motor Company (early 1900's)
"Ford will democratize the automobile"
Sony (early 1950's)
"Become the company most known for changing the worldwide poor-quality image of Japanese products"
"Become the dominant player in commercial aircraft and bring the world into the jet age"
"Become a $125 billion company by the year 2000"
So, when you are preparing your Mission Statement remember to make it clear and succinct, incorporating socially meaningful and measurable
criteria and consider approaching it from a grand scale. As you create your Mission Statement consider including some or all of the following
The moral/ethical position of the enterprise
The desired public image
The key strategic influence for the business
A description of the target market
A description of the products/services
The geographic domain
Expectations of growth and profitability
(taken from: www.businessplans.org)
|Last updated 2008/09/28 07:26:15 PDT||Hits 246|